Nelson Ocaya Marie v Kamenge Deudonne and Others (Civil Appeal No. 8 of 2023)
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Holding
On a second appeal in a land-fraud suit, the Supreme Court held that where a person denies his signature on a transfer, the evidential burden shifts to the party asserting authenticity, and an attested transfer not proved by an attesting witness cannot be relied on. The purported sale by an unregistered agent, founded on a forged transfer, was illegal and void, and the transfer to the 1st respondent was set aside as fraudulent. However, under sections 160(c) and 165 of the Registration of Titles Act, the 2nd respondent was a bona fide purchaser without notice whose title, and the 3rd respondent's equitable mortgage, were protected. The appeal succeeded against the 1st respondent only.
Facts
The appellant was the registered proprietor of leasehold land at Plot 7 Martyrs Lane, Ntinda. In 2004 he engaged a property agent, Patrick Kasulu, to find a buyer, vacated the premises, and surrendered his certificate of title; on Kasulu's advice he applied to extend the expired lease. The 1st respondent expressed interest, took the lease-extension application, and then became unreachable. The appellant later discovered a fresh title had issued in his name, followed by a transfer to the 1st respondent, a further transfer to the 2nd respondent, and the registration of a mortgage in favour of the 3rd respondent bank. The transfer to the 1st respondent bore an undated transfer form with an "X" where the appellant should have signed, witnessed by one Katamba, who was never called; the appellant denied signing it. Neither the alleged sale agreement between the appellant and Kasulu nor the attesting witness was produced. The 2nd respondent later purchased the land, and the bank advanced money on the strength of the registered title.
Issues
- Whether the Court of Appeal erred in law by failing to determine if the appellant sold the suit land to Patrick Kasulu, and the legality of the purported sale by Kasulu to the 1st respondent.
- Whether the Court of Appeal erred concerning the burden of proof, execution, and legality of the transfer of the suit property to the 1st respondent (Exhibit P4).
- Whether the Court of Appeal erred concerning the declared consideration for the transfer from the 1st respondent to the 2nd respondent (Exhibit P2) and its legality.
- Whether the Court of Appeal erred in holding that illegality, particularly concerning the mortgage, ought to have been raised at the trial court, and in failing to determine the alleged illegalities concerning all impugned transactions.
- Whether the transfers to the 1st and 2nd respondents and the mortgage to the 3rd respondent are vitiated by fraud.
- Whether the 3rd respondent can validly claim the protection of a bona fide mortgagee for value without notice.
- What remedies, if any, are available to the parties.
Orders
- The appeal is allowed against the 1st respondent on grounds 1 to 9 (and ground 10), and partly against the 2nd respondent on grounds 8, 9 and 10 as to under-declaration of consideration.
- The judgment and orders of the Court of Appeal in Civil Appeal No. 158 of 2015 are set aside and substituted by this judgment.
- The judgment and orders of the High Court in HCCS No. 465 of 2012 are set aside and substituted by this judgment.
- It is declared that the purported transfer of the suit property to the 1st respondent (Kamenge Deudonne) was illegal, fraudulent, null and void.
- It is declared that the transfer from the 1st respondent to the 2nd respondent (John P. Kabayo) is protected by sections 160(c) and 165 of the Registration of Titles Act Cap 240.
- It is declared that the mortgage registered by the 3rd respondent (Housing Finance Bank Ltd) is valid as an equitable mortgage and enforceable between the parties thereto.
- The 1st respondent shall pay the appellant compensation for deprivation of land of UGX 525,000,000.
- The 1st respondent shall pay the appellant general damages of UGX 150,000,000 for fraud, inconvenience and loss of registered proprietorship.
- Interest at the court rate of 6% per annum shall apply to the decretal sums from the date of the High Court judgment until payment in full.
- The appellant is awarded the costs of this appeal and in the courts below, to be paid by the 1st respondent.
- The 2nd respondent shall pay Uganda Revenue Authority stamp duty based on the undeclared transfer consideration of UGX 85,000,000, to be assessed by URA.
- The appeal against the 3rd respondent is dismissed, with each party to bear its own costs.
Key headnotes
Burden of proof — Disputed signature — Shifting of evidential burden
Where a person testifies that a signature on a document is not his or hers, the general burden remaining on the party asserting a fact, the evidential burden shifts to the party seeking to enforce the document or who benefits from its validity to prove that the signature is genuine; the mere resemblance of the signature does not displace the denial, since a skilled forgery may be convincing.
Proof of documents — Attested transfer — Necessity of attesting witness
A document required by law to be attested cannot be used in evidence until at least one attesting witness has been called to prove its execution; an attested land transfer whose attesting witness is not called is not duly proved, and it is erroneous to shift the focus onto whether the party denying execution proved forgery.
Nemo dat — Sale by unregistered agent — Forged transfer as void
A person who is not the registered proprietor and holds no proven sale agreement from the registered owner acquires no legal or beneficial interest and can pass none; a transfer founded on a forged signature, by one who was not the registered proprietor, is without right and void, contrary to section 59 of the Registration of Titles Act.
Indefeasibility of title — Bona fide purchaser for value without notice — Protection under RTA
Under sections 64(1), 160(c) and 165 of the Registration of Titles Act, a bona fide purchaser for valuable consideration who acquires registered title in good faith without notice of a prior fraud is protected, and no action for recovery of land lies against him, even where a predecessor in the chain of title was registered through fraud; the exception to indefeasibility applies only where the current proprietor is a party or privy to the fraud.
Mortgages — Equitable mortgage by deposit of title — Failure of formal execution
A failure to comply with the formal requirements for a registered legal mortgage does not by that failure alone render the security a nullity; where the registered proprietor deposits the certificate of title with intent to create security, an enforceable equitable mortgage arises under section 129 of the Registration of Titles Act, and an unregistered mortgage is enforceable between the parties under section 2(5) of the Mortgage Act.
Illegality — Power to raise at any stage including on appeal
An illegality, once brought to the attention of the court, cannot be ignored and may be raised at any stage of the proceedings, including on appeal; it was an error to hold that the legality of the mortgage ought to have been raised only at trial, though on the merits the illegality alleged did not vitiate the protected title and equitable mortgage.
Conveyancing — Statement of true consideration — Under-declaration as a revenue matter
Section 92(1) of the Registration of Titles Act requires the true consideration to be stated in a transfer, and concealment of the true amount is evidence of dishonesty and an offence attracting liability for unpaid revenue; however, where the under-declaration defrauds only the revenue authority and not the transferee in title, it is a matter for stamp-duty assessment and does not of itself impeach the registered title.
Legislation cited (24)
- Registration of Titles Act Cap 240 s.59
- Registration of Titles Act Cap 240 s.64(1)
- Registration of Titles Act Cap 240 s.76
- Registration of Titles Act Cap 240 s.91(1)
- Registration of Titles Act Cap 240 s.92(1)
- Registration of Titles Act Cap 240 s.129
- Registration of Titles Act Cap 240 s.132
- Registration of Titles Act Cap 240 s.160(c)
- Registration of Titles Act Cap 240 s.165
- Registration of Titles Act s.176
- Registration of Titles Act s.181
- Evidence Act Cap 8 s.66
- Evidence Act Cap 8 s.67
- Evidence Act Cap 8 s.68
- Evidence Act Cap 8 s.72
- Evidence Act Cap 8 s.101
- Evidence Act Cap 8 s.102
- Evidence Act Cap 8 s.103
- Mortgage Act Cap 239 s.2(5)
- Mortgage Act 2009 s.8
- Civil Procedure Act s.26
- Civil Procedure Rules O.6 r.7
- Judicature (Supreme Court Rules) Directions r.31
- Rules of Court r.96
Cases cited (41)
- Tumushabe and Another v Anglo-African Ltd and Another (Civil Appeal No. 7 of 1999)
- Patel v Spear Motors (Civil Appeal No. 4 of 1991)
- Mpagi Godfrey v Uganda, SCCA No. 11/93
- Nicholas Roussos v Virani and Another (Civil Appeal No. 9 of 1993)
- Kizza Besigye v Electoral Commission and Another (Presidential Election Petition No. 1 of 2006)
- Kasifa Namusisi v Ntabazi (Civil Appeal No. 4 of 2008)
- Katunde & Anor v Uganda Railways Corporation, SCCA No. 12/93
- Shariff Osman v Mulangwa (Civil Appeal No. 38 of 1995)
- Express Newspaper Plc v News (U.K.) Ltd [1990] 1 WLR 1320
- Aziz Kasujja v Nakakande (Civil Appeal No. 63 of 1998)
- Senkungu and 2 Others v Mukasa (Civil Appeal No. 17 of 2004)
- Betty Kizito v Kanonya and Others (Civil Appeal No. 8 of 2018)
- Fredrick J.K. Zaabwe v Orient Bank Ltd and Others [2007] UGSC 21
- NPART v Kapeeka Coffee Works and Another (Civil Appeal No. 8 of 2001)
- Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847
- Abdallah v R [1970] EA 657
- Kyagalanyi Coffee Ltd v Tomusange (Civil Appeal No. 9 of 2001)
- National Social Security Fund and Another v Alcon International Ltd (Civil Appeal No. 15 of 2009)
- Lutalo v Ojede (Civil Appeal No. 15 of 2012)
- Ham Enterprises Ltd and Others v Diamond Trust Bank and Another (Civil Appeal No. 13 of 2021)
- Macfoy v United Africa Co. Ltd [1961] 3 All ER 1169
- Sinba (K) Ltd and 4 Others v Uganda Broadcasting Corporation [2015] UGSC 21
- Makula International Ltd v His Eminence Cardinal Nsubuga and Another (Civil Appeal No. 4 of 1981)
- David Sejjaka Nalima v Rebecca Musoke [1986] UGSC 16
- Kampala Bottlers Ltd v Damanico (U) Ltd (Civil Appeal No. 22 of 1992)
- Virani v Nicholas Roussos (Civil Appeal No. 9 of 1993)
- Housing Finance Bank and Another v Edward Musisi (Civil Appeal No. 22 of 2014)
- Formula Feeds Ltd & Ors v KCB Bank, SCCA No. 13/020
- Kuwe v Vader, SCCA No. 2/02
- Kateeba and 3 Others v Mugyenzi and 2 Others [2025] UGSC 6
- Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
- Brown v Rolls Royce Ltd [1960] 1 All ER 577
- Bonnington Castings Ltd v Wardlaw [1956] AC 613
- Grindlays Bank (Uganda) Ltd v Uganda Bottlers Ltd [1996] UGSC 32
- Frazer v Walker [1967] 1 AC 569
- Assets Co Ltd v Mere Roihi
- Boyd v Wellington Corpn
- General Parts (U) Ltd and Others v Non-Performing Assets Recovery Trust [2006] UGSC 3
- Ministry of Defence v Ashman and Another [1993] 2 EGLR 102
- Kivumbi v AG, SCCA No. 6/11
- Hima Cement Ltd v Cairo Bank (HCCS No. 13 of 2003)
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